Conroy rules on $4.75bn NBN question

Property developers have endorsed a settlement with the federal government over who will be responsible for work linked to the national broadband network that could ­cost up to $4.75 billion over the next decade.

Communications Minister
Stephen Conroy
moved yesterday to settle arguments over new housing projects by ruling that
Telstra
would be the “provider of last resort" for developments of fewer than 100 lots or units.

The decision comes after months of bickering between Telstra and the government company building the network, NBN Co, over which of the two was obliged to connect ­thousands of homes. With about 134,000 homes built each year, the dispute threatened to undermine support for the project as Telstra and NBN Co tried to finalise a commercial alliance, expected to be sealed as early as next week.

Property industry sources expressed doubts about the announcement, saying the initial plan for new housing developments – or “greenfield" sites – had been revised twice and might be changed again.

The Labor caucus voted in November 2009 to approve laws to mandate fibre connections at new developments, but thi s was modified in early 2010 after industry complaints that it would add to the cost of new homes.

A further change last December gave the NBN Co greater responsibility to connect homes.

Yesterday’s announcement means that NBN Co will lay fibre to developments of more than 100 dwellings while Telstra will connect developments of fewer than 100 dwellings approved from the start of this year.

In a key clarification, Senator Conroy said Telstra would be the “provider of last resort" for projects approved before January 1, 2011.

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“This definitely provides an extra level of certainty for us," Residential Development Council executive
Caryn Kakas
said. “The frustration for us comes at the junction between Telstra’s responsibility and NBN Co’s responsibility. This requires Telstra to negotiate a solution."

Urban Taskforce Australia chief executive Aaron Gadiel said developers had been at their “wits’ end" trying to deal with conflicts between ­Telstra and the NBN Co. “We hope that the new rules will, once and for all, clear up any misunderstanding between the NBN Co and Telstra as to who is responsible for what," he said.

Legislation for the scheme said it would cost about $2500 to connect each dwelling and Senator Conroy has said the arrangements would cover 1.9 million premises over the construction phase of the NBN.

The cost is already factored into the NBN Co’s business plan, but developers will bear the cost of digging trenches and laying pipes. Telstra backed yesterday’s moves. “This is a good outcome and provides customers, the industry and developers the certainty we’ve been looking for," a spokeswoman said.

Separately, Australian Competition and Consumer Commission chairman
Graeme Samuel
supported laying optical fibre to each home, noting there was a legal risk to the government’s earlier proposal to lay fibre to “nodes" on street corners.